Bureau of Industry & Security Publishes Best Practices in Effort to Curb Illegal Export Transshipments

Sep 12, 2011   

On August 31, 2011, the U.S. Department of Commerces Bureau of Industry and Security (BIS) announced its publication of a new set of best practices, aimed at curbing the practice of transshipment of dual-use items. Transshipment is a shipping practice whereby items are sent to an intermediate destination before being shipped again for arrival at the goods ultimate destination. While transshipment undoubtedly has legitimate and beneficial uses in our globalized economy, some argue that the practice is being used in a way that creates heightened security risk to the United States, particularly when dual-use items are involved.

BIS-regulated “dual-use” items are those goods that have both commercial and military applications. When dual-use items are exported, transshipment may be used to disguise the ultimate destination of the goods from the U.S. government and the U.S. exporter. Or on the other hand, transshipment can serve as a means for a U.S. exporter who has knowledge that it is violating an embargo to have a way to deny knowledge of the exports ultimate destination. So, for example, transshipment can be used to hide the fact that a dual-use item is being exported to an embargoed country like Iran by first having the item shipped to a non-embargoed country like Singapore. The shipping documents would show that the U.S. exporter sent the dual-use item to a friendly, non-embargoed country, but then the intermediate consignee in Singapore, perhaps a front for the Iranian government, would then turn around and ship the item to the Iranian military, thus violating the U.S. embargo against Iran. Thus, BIS issued its Best Practices in order to gain cooperation from the U.S. export industry in an effort to thwart these dangers.

Found here, the BIS-issued 2011 Best Practices details seven practices that U.S. exporters are urged to follow. In particular, the practices direct companies to notify BIS when a buyers order for export is denied, in addition to using due-diligence when gathering information about potential customers. While many of these practices emphasize cooperation between industry and government, there may be consequences for willful disregard of these practices in the future. Because companies may no longer be able to turn a blind eye to the potential transshipment of their dual-use items, these Best Practices could be the first step to imposing liability on companies whose goods wind up in the wrong hands.

Fuerst Ittleman lawyers are experienced in representing companies and individuals under investigation for engaging in illegal exporting activity, including transshipment of dual-use items to embargoed countries. Fuerst Ittleman can also assist exporters with their compliance efforts to avoid export violations. For more information concerning BIS regulations or other trade-related issues, please contact us at contact@fidjlaw.com